A recent study released by Canadian Manufacturers and Exporters (CME) found that 69% of manufacturers would reduce research and activity activities, and 18% would shift their R&D to other jurisdictions if the federal government exempts capital expenditures from the SR&ED program. While the majority of Canadian businesses engaged in R&D spend on labour costs, large businesses in aerospace or refineries need to invest in capital expenditures in their prototyping and testing operations.

“As we’re making changes in SR&ED, other countries around the world are implementing tax measures and direct spending measures with the idea of making their jurisdictions more attractive,” said the CME’s chief executive Jay Myers.